Hormel Foods Corp /De/ (NYSE: HRL)

Sector: Consumer Defensive Industry: Packaged Foods CIK: 0000048465
Market Cap 12.37 Bn
P/B 3.09
P/E 18.03
P/S 1.34
ROIC (Qtr) 19.79
Div Yield % 3.38
Rev 1y % (Qtr) 1.52
Total Debt (Qtr) 2.86 Bn
Debt/Equity (Qtr) 0.36
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About

Hormel Foods Corporation, a Delaware corporation operating in the meat and food products industry, is listed on the New York Stock Exchange under the ticker symbol HRL. Established in 1891 by George A. Hormel, the company has grown into a global entity with a significant presence in the industry. Hormel Foods Corporation's primary business activities involve the processing, marketing, and sale of branded, value-added consumer items. These products encompass a wide range of food categories, including meat, nuts, and various other food products....

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Investment thesis

Bull case

  • Healthy cash reserves of 670.68M provide 100.91x coverage of short-term debt 6.65M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 845.25M provides strong 33.02x coverage of stock compensation 25.60M, indicating sustainable incentive practices.
  • Operating cash flow of 845.25M provides exceptional 10.83x coverage of interest expenses 78.04M, showing strong debt service capability.
  • Robust free cash flow of 534.48M exceeds capital expenditure of 310.77M by 1.72x, indicating strong organic growth funding capability.
  • Cash reserves of 670.68M provide ample 79.49x coverage of acquisition spending 8.44M, enabling strategic growth opportunities.

Bear case

  • Operating cash flow of 845.25M barely covers its investment activities of (298.59M), with a coverage ratio of -2.83, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 845.25M provides thin coverage of dividend payments of (633.19M) with a -1.33 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 741.92M show weak coverage of depreciation charges of 305.80M, with a 2.43 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 534.48M represents just -68.26x of debt issuance (7.83M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 845.25M shows concerning coverage of minority interest expenses of (433000), which is -1952.08x, suggesting complex corporate structure risks.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Packaged Foods
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KHC Kraft Heinz Co 28.20 Bn -4.82 1.13 21.22 Bn
2 GIS General Mills Inc 26.99 Bn 20.72 1.54 13.73 Bn
3 JBS Jbs N.V. 17.81 Bn 10.08 0.23 23.92 Bn
4 MKC Mccormick & Co Inc 16.10 Bn 44.21 3.77 4.00 Bn
5 HRL Hormel Foods Corp /De/ 12.37 Bn 18.03 1.34 2.86 Bn
6 SJM J M SMUCKER Co 11.08 Bn 19.60 1.97 7.91 Bn
7 PPC Pilgrims Pride Corp 10.32 Bn 9.54 0.56 3.29 Bn
8 MICC Magnum Ice Cream Co N.V. 9.71 Bn 28.17 1.04 4.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.94 1.47
EV to Cash from Ops. EV/CFO 12.72 29.75
EV to Debt EV to Debt 4.42 27.85
EV to EBIT EV/EBIT 11.81 86.88
EV to EBITDA EV/EBITDA 10.72 -156.20
EV to Free Cash Flow [EV/FCF] EV/FCF 14.57 -5.67
EV to Market Cap EV to Market Cap 1.02 1.15
EV to Revenue EV/Rev 1.36 7.32
Price to Book Value [P/B] P/B 3.09 8.48
Price to Earnings [P/E] P/E 18.03 14.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.76 4.58
Dividend Payout Ratio % Div Payout % (Qtr) 133.30 3.76
Dividend per Basic Share Div per Share (Qtr) 1.16 0.65
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 119.46 22.76
Interest Coverage Int. cover (Qtr) 9.51 6.64
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -21.41 -118.07
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -9.60 43.48
Dividend Growth (1y) % Div 1y % (Qtr) 2.65 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -38.43 -48.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -13.87 -152.35
EBIT Growth (1y) % EBIT 1y % (Qtr) -33.56 -50.79
EBT Growth (1y) % EBT 1y % (Qtr) -35.91 -54.94
EPS Growth (1y) % EPS 1y % (Qtr) -40.82 -28.10
FCF Growth (1y) % FCF 1y % (Qtr) -47.12 7.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -6.44 439.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.90 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.55 0.12
Cash Ratio Cash Ratio (Qtr) 0.49 0.86
Current Ratio Curr Ratio (Qtr) 2.47 2.60
Debt to Equity Ratio Debt/Equity (Qtr) 0.36 2.21
Interest Cover Ratio Int Coverage (Qtr) 9.51 6.64
Times Interest Earned Times Interest Earned (Qtr) 9.51 6.64
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.70 -919.13
EBIT Margin % EBIT Margin % (Qtr) 6.13 -1,474.87
EBT Margin % EBT Margin % (Qtr) 5.48 -1,537.76
Gross Margin % Gross Margin % (Qtr) 15.60 26.98
Net Profit Margin % Net Margin % (Qtr) 4.00 -1,538.60